YouTubers in Breach of FTC if They Fail to Disclose Sponsorships

In a previous post I praised Twitch for their new sponsored video policy. At the same time, I begged the question, where is YouTube’s policy on sponsored product or service promotions? Since the publication of that article, Mary Engle, associate director for Advertising Practices at the FTC, has indicated that YouTube may not need a policy after all, and clarified that the position the FTC holds about paid reviews. She confirmed that YouTube may not have to issue separate guidelines because:

Creators are already in breach of FTC rules when not disclosing paid sponsorships.

Vloggers Who Accept Payments Fall Under FTC Guidelines

At its roots, YouTube is a video blogging site, made up of personal videos and opinions. But the minute that a creator begins accepting money for those videos, they begin to fall into a different category. According to the FTC, creators should be prefacing any paid endorsement, review or advertisement with a statement like: “This is a paid review”. Creators on the site regularly do not disclose these relationships, believing that they are simply making a personal video and that the FTC rules do not apply to them. Perhaps they are not even aware of the rules. Mary went one step further to clarify the point saying:

If you are paid or compensated, then yes, you should disclose that you are paid.

Due to the nature of YouTube videos, best practice would suggest this disclosure must be placed within the video itself. Why? Because video embeds don’t come with the description, and a paid endorsement could be misconstrued as an independent review. According to the FTC:

The basics are that the disclosure has to be in words that the consumer can understand – it can’t just be a URL or a link, it has to be in a place where consumers will see it. Certainly as a practical matter, the best thing would be to put it in the video itself, and for the person to say it.

Sponsored Videos are Not Always That Obvious

At times a paid advertisement may seem obvious, but creators have gone to great lengths to maintain a genuine appearance in their videos and claiming that a video is a paid advertisement often hurts viewer retention.

The responsibility for these disclosures falls somewhat on the creators’ shoulders, but the brunt of the responsibility actually falls on the company paying for the advertisements. They should be informing creators of their responsibility to disclose this information. Their failure to do so and/or the creator’s failure to do so is a blatant attempt at capturing viewers’ attention for the sake of making a quick buck. It is much easier to trick your audience into watching paid for advertisement than to be up front about it and actually provide compelling content for the viewer. Misleading a loyal audience is preying on their trust and love for a creator’s content in order to exploit them for money.

Although there is a note in the description that “This video was proudly made in collaboration with Wet N Wild” it doesn’t implicitly state that Ms Candy was paid, and this issue is starting to attract attention:

YouTube Is Not Legally Responsible for Its Creators

So circling back to the question I asked last week, I’ll go one step further. Why ISN’T YouTube creating a policy like Twitch? Simply put, they don’t have to. They are the market leader by such a wide margin right now that whether or not they have a policy doesn’t impact the bottom line. They are not compelled to act. Additionally, they have no legal responsibility to these creators. According to Mary, “If they’re not involved in formatting it, they’re just the platform, and they probably wouldn’t have any legal responsibility”.

YouTube has been very careful to distance themselves from legal liability in videos ever since their massive lawsuit with Viacom. It’s working. Although at this point YouTube is operating more like a massive, On-Demand television station, their ability to distance themselves from creators are allowing them to take a hands-off approach to paid sponsorships. The lines between YouTube and television are continuing to blur and YouTube should be careful. If they want to become more and more like television, eventually they’re going to get regulated like it.

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